1 00:00:03,420 --> 00:00:05,960 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean 2 00:00:06,000 --> 00:00:09,650 Sean Aylmer: Aylmer. As more retail investors are getting into equities, competition 3 00:00:09,650 --> 00:00:13,320 Sean Aylmer: is heating up among shared trading platforms. Brokerage fees are 4 00:00:13,320 --> 00:00:16,530 Sean Aylmer: extraordinary low. There's a huge amount of information available about 5 00:00:16,530 --> 00:00:20,610 Sean Aylmer: companies and accessing global markets is getting much easier. One 6 00:00:20,610 --> 00:00:23,360 Sean Aylmer: of the first players on the scene was SelfWealth. The 7 00:00:23,360 --> 00:00:26,640 Sean Aylmer: online training platform launched a decade ago and listed on the 8 00:00:26,640 --> 00:00:30,150 Sean Aylmer: ASX in 2017. Cath Whitaker is the CEO of SelfWealth. 9 00:00:31,310 --> 00:00:32,840 Sean Aylmer: Cath, welcome to Fear and Greed. 10 00:00:33,470 --> 00:00:34,409 Cath Whitaker: Thanks for having me, Sean. 11 00:00:35,620 --> 00:00:39,070 Sean Aylmer: So SelfWealth is one of the very original flat- fee 12 00:00:39,150 --> 00:00:44,000 Sean Aylmer: share trading platforms in Australia. Is that, I mean, just a potted history of 13 00:00:44,140 --> 00:00:44,001 Sean Aylmer: SelfWealth please? 14 00:00:45,830 --> 00:00:48,370 Cath Whitaker: Yeah, sure. So as you say, it started off over a 15 00:00:48,370 --> 00:00:51,370 Cath Whitaker: decade ago and we really did start off as a 16 00:00:51,370 --> 00:00:55,460 Cath Whitaker: community of investors. And then we've done a series of 17 00:00:55,460 --> 00:00:59,130 Cath Whitaker: firsts within the Australian market, flat- fee brokerage bought in, 18 00:01:00,160 --> 00:01:03,520 Cath Whitaker: listing in 2017, and since then we've launched just a 19 00:01:03,520 --> 00:01:08,250 Cath Whitaker: variety of other firsts looking at ESG data, US trading, 20 00:01:08,319 --> 00:01:11,520 Cath Whitaker: early access to US trading, the list goes on. 21 00:01:12,470 --> 00:01:17,140 Sean Aylmer: Okay, so you are flat- fee share trading platform. You 22 00:01:17,140 --> 00:01:21,339 Sean Aylmer: are much cheaper than perhaps your biggest rival, which is 23 00:01:21,340 --> 00:01:23,670 Sean Aylmer: about twice your price, but there's also a bunch of 24 00:01:23,670 --> 00:01:26,990 Sean Aylmer: share trading platforms that are offering zero brokerage. It seems 25 00:01:26,990 --> 00:01:30,319 Sean Aylmer: like an incredibly competitive marketplace at the moment. And I 26 00:01:30,319 --> 00:01:31,980 Sean Aylmer: wonder whether they're everyone's sustainable. 27 00:01:32,440 --> 00:01:35,360 Cath Whitaker: Yeah, terrific question. And look, our view is this, I 28 00:01:35,360 --> 00:01:39,350 Cath Whitaker: mean, SelfWealth is different in terms of, we were cash 29 00:01:39,350 --> 00:01:43,959 Cath Whitaker: flow positive for the financial year of 2021. So, we 30 00:01:43,959 --> 00:01:47,160 Cath Whitaker: know that even with our low cost and high service, 31 00:01:47,570 --> 00:01:51,220 Cath Whitaker: our business model works. Looking at the new entrant that 32 00:01:51,220 --> 00:01:54,200 Cath Whitaker: have come into the market, really pushing as you say, 33 00:01:54,200 --> 00:01:57,580 Cath Whitaker: a zero or a very low cost brokerage, we know 34 00:01:57,580 --> 00:02:01,590 Cath Whitaker: that they have to be lost leaders. From our perspective, 35 00:02:01,620 --> 00:02:05,150 Cath Whitaker: we are concerned in terms of who will survive in 36 00:02:05,150 --> 00:02:10,269 Cath Whitaker: that bottom to the barrel race, especially given it's retail 37 00:02:10,270 --> 00:02:13,620 Cath Whitaker: investors that they're targeting. So moms and dads handing over 38 00:02:13,620 --> 00:02:17,960 Cath Whitaker: their cash, handing over custody to their equities, and knowing 39 00:02:17,960 --> 00:02:21,720 Cath Whitaker: that not all of those platforms will survive. A big 40 00:02:21,720 --> 00:02:22,500 Cath Whitaker: concern for us. 41 00:02:23,280 --> 00:02:26,010 Sean Aylmer: Okay, so how does SelfWealth make money then? Is it on that 42 00:02:26,010 --> 00:02:26,880 Sean Aylmer: brokerage fee? 43 00:02:27,490 --> 00:02:31,870 Cath Whitaker: Exactly, so we've been very transparent from the start, our $ 9. 44 00:02:31,870 --> 00:02:36,800 Cath Whitaker: 50, we have been ruthless in terms of cost, making 45 00:02:36,800 --> 00:02:41,500 Cath Whitaker: sure that our business model is sustainable. We pride ourselves 46 00:02:41,500 --> 00:02:46,410 Cath Whitaker: on disclosure, and for that, we've been rewarded through terrific loyalty with our 47 00:02:46,410 --> 00:02:47,560 Cath Whitaker: membership base. 48 00:02:47,880 --> 00:02:50,500 Sean Aylmer: Okay, I'm just interested in what you are seeing in 49 00:02:50,500 --> 00:02:53,210 Sean Aylmer: the market now. And one thing about a platform like 50 00:02:53,639 --> 00:02:56,490 Sean Aylmer: SelfWealth, you will see trends perhaps in front of others. 51 00:02:56,490 --> 00:02:59,700 Sean Aylmer: You mentioned ESG up front. Why is it that you 52 00:02:59,700 --> 00:03:02,859 Sean Aylmer: are now providing ESG data? Is it that big an 53 00:03:02,860 --> 00:03:04,360 Sean Aylmer: attraction to investors? 54 00:03:04,940 --> 00:03:08,600 Cath Whitaker: Yes. So from the start we have been a community 55 00:03:08,669 --> 00:03:11,300 Cath Whitaker: of members. And so as such, we look at how 56 00:03:11,570 --> 00:03:15,190 Cath Whitaker: our investors are looking at what to invest in next. 57 00:03:15,480 --> 00:03:19,530 Cath Whitaker: And we really saw a change in behavior early 2021, 58 00:03:19,830 --> 00:03:22,960 Cath Whitaker: where we noticed that people were looking at stock reports 59 00:03:22,960 --> 00:03:27,910 Cath Whitaker: with what we saw as companies having higher ESG ratings. 60 00:03:28,340 --> 00:03:30,650 Cath Whitaker: So what we wanted to do as we always do 61 00:03:30,650 --> 00:03:33,880 Cath Whitaker: is make sure that our investors have the right information 62 00:03:33,880 --> 00:03:36,550 Cath Whitaker: in front of them at the right time. And so 63 00:03:36,550 --> 00:03:41,460 Cath Whitaker: we partnered with and sure that our members have free 64 00:03:41,530 --> 00:03:45,820 Cath Whitaker: ESG data at their fingertips in a very simplistic way, 65 00:03:46,210 --> 00:03:49,820 Cath Whitaker: which is to have an A, B, or C marking 66 00:03:49,820 --> 00:03:54,770 Cath Whitaker: against each equity, which covers about 90% or so of global market. 67 00:03:55,550 --> 00:03:57,690 Sean Aylmer: Okay, and is this, the A, B or C, does 68 00:03:57,690 --> 00:04:01,990 Sean Aylmer: that reflect the carbon emissions? Does it reflect the ability 69 00:04:01,990 --> 00:04:06,070 Sean Aylmer: to change from fossil fuels to green fuels? What does 70 00:04:06,070 --> 00:04:07,390 Sean Aylmer: that ABC encompass? 71 00:04:07,930 --> 00:04:12,000 Cath Whitaker: Yeah, so there's just over 100 criteria that goes into 72 00:04:12,000 --> 00:04:15,700 Cath Whitaker: those A, B, and Cs. And of course, just to 73 00:04:15,700 --> 00:04:18,530 Cath Whitaker: throw a few more three letter acronyms, of course, the 74 00:04:18,560 --> 00:04:22,980 Cath Whitaker: E the S and the G each represent different criteria 75 00:04:22,980 --> 00:04:25,740 Cath Whitaker: as well. So what you can do, you get the 76 00:04:25,740 --> 00:04:29,000 Cath Whitaker: overview rating and then you can dive into each of those 77 00:04:29,410 --> 00:04:33,990 Cath Whitaker: criteria. So in this case environmental would cover off the carbon emissions, 78 00:04:34,390 --> 00:04:37,210 Cath Whitaker: and really have a look at how that company compares 79 00:04:37,210 --> 00:04:37,969 Cath Whitaker: to others. 80 00:04:38,240 --> 00:04:42,760 Sean Aylmer: Okay, is it a trend that is biased towards any 81 00:04:42,760 --> 00:04:46,010 Sean Aylmer: set of investors? I certainly know my kids who are 82 00:04:46,150 --> 00:04:49,720 Sean Aylmer: sort of interested in investing, they're teenagers or early 20s. 83 00:04:50,100 --> 00:04:52,409 Sean Aylmer: They are interested in investing, but all that really matters 84 00:04:53,730 --> 00:04:55,929 Sean Aylmer: is they think about it whereas when I was 20, I didn't, would've had no idea what the 85 00:04:55,930 --> 00:04:56,640 Sean Aylmer: acronym stood for. 86 00:04:57,330 --> 00:05:00,850 Cath Whitaker: Yeah, you're spot on. And so SelfWealth does offer minor 87 00:05:00,960 --> 00:05:05,430 Cath Whitaker: accounts as well. And so we absolutely do see more 88 00:05:05,430 --> 00:05:10,000 Cath Whitaker: interest in say younger demographics, although it is fair to 89 00:05:10,000 --> 00:05:13,960 Cath Whitaker: say as well looking at across the range it becomes often 90 00:05:13,960 --> 00:05:18,820 Cath Whitaker: a comparison between peer groups within a sector is what 91 00:05:18,820 --> 00:05:21,719 Cath Whitaker: we think is when the final decisions are made in terms 92 00:05:21,720 --> 00:05:23,980 Cath Whitaker: of how that ESG rating compares. 93 00:05:24,200 --> 00:05:27,770 Sean Aylmer: Okay, stay with me, Cath. We'll be back in a 94 00:05:27,770 --> 00:05:35,510 Sean Aylmer: minute. My guest this morning is Cath Whitaker, Chief Executive 95 00:05:35,510 --> 00:05:38,809 Sean Aylmer: Officer of SelfWealth. Now the other big one of course 96 00:05:38,810 --> 00:05:41,630 Sean Aylmer: is crypto at least for many investors. There's a lot 97 00:05:41,630 --> 00:05:44,469 Sean Aylmer: of demand for it. In April, you'll be adding direct trading in 98 00:05:44,470 --> 00:05:45,080 Sean Aylmer: crypto. Tell me about that. 99 00:05:46,080 --> 00:05:49,210 Cath Whitaker: That's right. So next quarter we will be adding crypto 100 00:05:49,320 --> 00:05:53,980 Cath Whitaker: functionality. And it does come from demand from our membership 101 00:05:53,980 --> 00:05:59,210 Cath Whitaker: base. We know that at the moment, roughly 35% of Australian 102 00:05:59,270 --> 00:06:03,719 Cath Whitaker: investors, we believe have somehow invested into crypto. However, what 103 00:06:03,720 --> 00:06:06,820 Cath Whitaker: we also know is there's a lot of confusion out 104 00:06:06,820 --> 00:06:10,219 Cath Whitaker: there in terms of how do I buy crypto, and 105 00:06:10,220 --> 00:06:13,070 Cath Whitaker: how is it stored, and will it be safe? And 106 00:06:13,070 --> 00:06:16,810 Cath Whitaker: indeed which of the hundreds of coins should I invest 107 00:06:16,810 --> 00:06:21,240 Cath Whitaker: in as a retail investor? So what the SelfWealth solution 108 00:06:21,240 --> 00:06:25,330 Cath Whitaker: will do is simplify that process. And we've gone to 109 00:06:25,330 --> 00:06:31,040 Cath Whitaker: great lengths to carefully choose the crypto partner, and to 110 00:06:31,040 --> 00:06:34,830 Cath Whitaker: make sure that from a retail investor perspective, it will 111 00:06:34,830 --> 00:06:38,810 Cath Whitaker: be as seamless as possible with a combined view of 112 00:06:38,810 --> 00:06:42,920 Cath Whitaker: your equities, your cash, and of course, your crypto holdings. 113 00:06:43,230 --> 00:06:45,950 Sean Aylmer: So potentially if I decide I want to buy Bitcoin 114 00:06:45,950 --> 00:06:49,760 Sean Aylmer: or at least parts of a Bitcoin unit, I can go 115 00:06:49,760 --> 00:06:55,370 Sean Aylmer: to SelfWealth, spend $1, 000, $ 20, 000 and buy that part of 116 00:06:55,370 --> 00:06:57,760 Sean Aylmer: the Bitcoin. Is that as easy as it's going to be? 117 00:06:58,020 --> 00:07:00,830 Cath Whitaker: Absolutely right. And the best thing about it is that 118 00:07:00,830 --> 00:07:05,080 Cath Whitaker: you'll see your total holdings combined together. We do a 119 00:07:05,080 --> 00:07:09,359 Cath Whitaker: great deal of visualization in terms of movements of values 120 00:07:09,360 --> 00:07:12,400 Cath Whitaker: as well, just all in one place. For us at 121 00:07:12,410 --> 00:07:15,910 Cath Whitaker: SelfWealth it's about simplicity and convenience. 122 00:07:16,060 --> 00:07:17,720 Sean Aylmer: Okay, some of the data out of SelfWealth, I think 123 00:07:17,820 --> 00:07:21,150 Sean Aylmer: is really interesting. Half your users are millennials, 25% are 124 00:07:21,150 --> 00:07:24,710 Sean Aylmer: Gen X, and then 15% baby boomers. Clearly you have 125 00:07:24,710 --> 00:07:27,530 Sean Aylmer: a skew to the 30 year olds rather than the 126 00:07:27,530 --> 00:07:30,290 Sean Aylmer: 60 year olds, about two thirds of male and a 127 00:07:30,300 --> 00:07:35,020 Sean Aylmer: third female again, across the board. That's probably, as I know that 128 00:07:35,020 --> 00:07:38,330 Sean Aylmer: there's more males there, but it shows that females are 129 00:07:38,330 --> 00:07:40,660 Sean Aylmer: used in SelfWealth, probably in bigger numbers than they are 130 00:07:40,730 --> 00:07:44,440 Sean Aylmer: on other platforms. That's really interesting, but they're still investing 131 00:07:44,440 --> 00:07:47,240 Sean Aylmer: in all the traditional stocks, Commonwealth Bank, Westpac, CSL, BHP, 132 00:07:48,370 --> 00:07:50,500 Sean Aylmer: National Australia Bank. Are they, I don't know, are they 133 00:07:51,280 --> 00:07:54,500 Sean Aylmer: conservative? Is it just a function that those companies are so big? 134 00:07:54,830 --> 00:07:55,440 Sean Aylmer: Why is that? 135 00:07:55,960 --> 00:07:58,830 Cath Whitaker: Yeah, look, we've done a little bit of work in 136 00:07:58,830 --> 00:08:03,270 Cath Whitaker: terms of looking at different behaviors across not just gender, 137 00:08:03,270 --> 00:08:07,110 Cath Whitaker: but across demographic. And what we often say is that 138 00:08:07,110 --> 00:08:12,460 Cath Whitaker: it's too easy to jump straight into the demographic comparison. Instead, 139 00:08:12,460 --> 00:08:17,001 Cath Whitaker: we look much more at investor behaviours. We know that folk are, 140 00:08:18,170 --> 00:08:20,760 Cath Whitaker: it depends very much on what their life goal is 141 00:08:20,760 --> 00:08:24,530 Cath Whitaker: at that moment, whether they're planning for the future, whether 142 00:08:24,530 --> 00:08:27,550 Cath Whitaker: they're saving for a particular goal. And we find it's 143 00:08:27,550 --> 00:08:32,670 Cath Whitaker: actually the behavior and driver that actually determines their investment decisions. 144 00:08:33,100 --> 00:08:36,470 Sean Aylmer: Okay, so if they've decided that they want to save 145 00:08:36,470 --> 00:08:39,929 Sean Aylmer: for retirement when they're 20, they behave very differently than 146 00:08:39,929 --> 00:08:41,760 Sean Aylmer: if they decide they want to save for a car 147 00:08:41,760 --> 00:08:42,620 Sean Aylmer: in three years time. 148 00:08:43,330 --> 00:08:47,320 Cath Whitaker: Yes, that is absolutely correct. And that's why we absolutely 149 00:08:47,320 --> 00:08:50,990 Cath Whitaker: love looking at the community peace and the behaviors. And 150 00:08:50,990 --> 00:08:54,690 Cath Whitaker: which is why I think when there was a little 151 00:08:54,690 --> 00:08:58,550 Cath Whitaker: bit of market volatility just earlier this year, we did 152 00:08:58,550 --> 00:09:02,330 Cath Whitaker: see a shift in trends and behaviors more toward those 153 00:09:02,420 --> 00:09:07,390 Cath Whitaker: ETF related stocks as well. So it's an area that 154 00:09:07,670 --> 00:09:11,110 Cath Whitaker: we have rich experience in. We have seven years of 155 00:09:11,110 --> 00:09:14,730 Cath Whitaker: trading data. And look what we'll continue to do is 156 00:09:14,730 --> 00:09:17,819 Cath Whitaker: to support those people who want to align to different 157 00:09:17,820 --> 00:09:21,429 Cath Whitaker: behaviors in trading and make sure that they can see what 158 00:09:21,429 --> 00:09:24,339 Cath Whitaker: others are doing and help them align to whatever their 159 00:09:24,340 --> 00:09:24,721 Cath Whitaker: goals are. 160 00:09:24,721 --> 00:09:27,460 Sean Aylmer: Okay. And I mean, in some ways it's kind of 161 00:09:27,460 --> 00:09:31,370 Sean Aylmer: self reinforcing if everyone's seeking the same thing, that thing 162 00:09:31,370 --> 00:09:33,339 Sean Aylmer: tends to happen only because of the weight of numbers. 163 00:09:33,900 --> 00:09:37,309 Cath Whitaker: Correct, correct. But everyone wants different things at different points 164 00:09:37,309 --> 00:09:37,479 Cath Whitaker: of life. 165 00:09:38,300 --> 00:09:41,570 Sean Aylmer: Okay. Investing in the US, and that's something which 30 166 00:09:41,570 --> 00:09:45,380 Sean Aylmer: years ago was extremely difficult to do. Now you can 167 00:09:45,380 --> 00:09:48,100 Sean Aylmer: do that. Are people investing a lot more in the 168 00:09:48,100 --> 00:09:51,100 Sean Aylmer: Teslas and the sort of those really big brand names, 169 00:09:51,480 --> 00:09:53,929 Sean Aylmer: all the big tech, Apple, Microsoft, et cetera, but even 170 00:09:54,230 --> 00:09:56,020 Sean Aylmer: the McDonald's and those sorts of things of the world. 171 00:09:57,120 --> 00:09:59,670 Cath Whitaker: Yes they are. And you're spot on. Access is not 172 00:09:59,670 --> 00:10:03,250 Cath Whitaker: just to the US, but other international markets. I think 173 00:10:03,250 --> 00:10:06,589 Cath Whitaker: that has been one of the main changes that have 174 00:10:06,590 --> 00:10:09,850 Cath Whitaker: happened in the last five years. There's no need to 175 00:10:09,850 --> 00:10:13,500 Cath Whitaker: pay the exorbitant fees anymore to do that. And in 176 00:10:13,500 --> 00:10:17,080 Cath Whitaker: terms of what our membership are investing in, it does 177 00:10:17,080 --> 00:10:21,080 Cath Whitaker: tend to be the tech stocks, also the retail brands 178 00:10:21,080 --> 00:10:23,069 Cath Whitaker: that they are familiar with. 179 00:10:23,080 --> 00:10:27,670 Sean Aylmer: Okay. Now talking about SelfWealth itself, you had a great 2020 in share 180 00:10:27,670 --> 00:10:30,840 Sean Aylmer: price terms. It's come back now. But I presume that's on the back of 181 00:10:30,840 --> 00:10:33,070 Sean Aylmer: the spike in retail investing. Is that right? 182 00:10:33,640 --> 00:10:37,750 Cath Whitaker: Yeah, it was. We were the classic COVID story in 183 00:10:37,750 --> 00:10:41,760 Cath Whitaker: terms of the share price. Going from 2019 to 2020, 184 00:10:42,110 --> 00:10:48,099 Cath Whitaker: it's estimated that retail investors jumped from about 700,000 to 1. 6 million. Now 185 00:10:48,140 --> 00:10:53,270 Cath Whitaker: at the end of 2021, obviously a huge increase in 186 00:10:53,270 --> 00:10:56,660 Cath Whitaker: the addressable market, which probably explains why there's been an 187 00:10:56,660 --> 00:11:00,820 Cath Whitaker: influx of competitors into the space. But from our share 188 00:11:01,140 --> 00:11:06,530 Cath Whitaker: price perspective, our small cap insto's (institutions) in Australia certainly recognized that 189 00:11:06,530 --> 00:11:11,780 Cath Whitaker: changing trend, got in and as other opportunities came about 190 00:11:11,780 --> 00:11:16,250 Cath Whitaker: during COVID came back from the share price. So we've 191 00:11:16,250 --> 00:11:18,439 Cath Whitaker: certainly rid the full cut COVID wave. 192 00:11:18,620 --> 00:11:24,750 Sean Aylmer: Yeah, okay. So what next? We've got cryptos in April. What's next beyond that? SelfWealth is very innovative. 193 00:11:25,130 --> 00:11:29,150 Cath Whitaker: Yeah, so what's next, and SelfWealth is hugely innovative, which 194 00:11:29,270 --> 00:11:31,550 Cath Whitaker: is what we pride ourselves on. We have our Hong 195 00:11:31,550 --> 00:11:35,140 Cath Whitaker: Kong release coming up in the next few weeks. As 196 00:11:35,140 --> 00:11:39,390 Cath Whitaker: you say, we have crypto coming next quarter. Our mission 197 00:11:39,390 --> 00:11:43,510 Cath Whitaker: in life is to empower financial freedom for people, which 198 00:11:43,510 --> 00:11:47,429 Cath Whitaker: means bringing on even more asset types for our retail 199 00:11:47,429 --> 00:11:53,370 Cath Whitaker: investors and continuously improving our usability of the platform, and 200 00:11:53,370 --> 00:11:56,160 Cath Whitaker: of course, maintaining our very high service levels. 201 00:11:56,520 --> 00:11:59,011 Sean Aylmer: Cath, thank you for talking to Fear and Greed. 202 00:11:59,011 --> 00:11:59,611 Cath Whitaker: Thank you very much, Sean. 203 00:11:59,611 --> 00:12:03,449 Sean Aylmer: That was Cath Whitaker, CEO of SelfWealth. This is the Fear 204 00:12:03,750 --> 00:12:06,100 Sean Aylmer: and Greed Daily Interview. Join me every morning for the 205 00:12:06,100 --> 00:12:08,610 Sean Aylmer: full Fear And Greed podcast with all the business news 206 00:12:08,780 --> 00:12:11,340 Sean Aylmer: you need to know. I'm Sean Alymer, enjoy your day.